The Impact of Political Unrest on Russia’s Economy (Essay Sample)

The Impact of Political Unrest on Russia’s Economy Student Name Course Institution Professor Date The Impact of Political Unrest on Russia’s Economy Political alliances are essential for economic relationships between nations by creating trade channels. The article “What are the sanctions on Russia and have they affected its economy?” by BBC News aims to bring to light the extensive effect of politics on a nation’s economy. It highlights the drastic measures and tries to analyze the impacts of sanctions by other countries on Russia’s economy. It captures a few adopted strategies to weaken Russia’s economy and how Russia has developed mitigation strategies to ensure economic well-being. The article depicts how political unrest adversely affects the global economy through geopolitical bloc fragmentation, fiscal policies and regulations. Global integration stimulates the economy by providing trade avenues to meet the needs of the laws of demand and supply. These geopolitical blocs are governed by policies facilitating trade partnerships, allowing nations to sell goods to other nations, and generating national income. BBC News highlights the fragmentation between Russia and the EU. The introduction of sanctions restricts economic relationships with nations in a trade bloc, inhibiting the sanctioned country from selling its produce (Fernández-Villaverde et al., 2024). This initiative reduces the market size of the sanctioned country. Consequently, producers in a sanctioned country are forced to reduce their output due to a reduction in supply, significantly reducing their profits. Fiscal policies purposefully structure taxation and subsidy models to influence economic trends by promoting production while generating revenue. The rate of taxation influences the cost of business operations and imports. BBC News highlights the G7 imposing a higher price cap on Russia’s crude oil, at $60, reducing its consumption. Russia still exports crude oil to other nations at prices higher than the imposed cap. However, Russia suspending the double taxation treaty (DTT) meant commodities and revenue are taxed in Russia and the country of origin, affecting non-friendly countries (Tiwari, 2023). For instance, an EU citizen is subjected to filing income tax in Russia and the country of origin, which reduces their income. Also, it affected the foreign investors in Russia by reducing the revenue they generate from the country. Policies intend to regulate and dictate the terms of how businesses operate. They create a suitable environment for the local producers to compete against competitors. Favorable policies encourage foreign investors to participate in business. On the contrary, adopting certain policies can negatively affect foreign investors (Pavlínek, 2023). For instance, the United Kingdom and the United States have restricted Russian investors from participating in business within their boundaries. Also, corporations of US and UK origin needed to relocate from Russia. International integration facilitates economic growth by enhancing business relations among nations. Geopolitical fragmentation requires a nation to strategize and economically establish itself. The article elucidates the effects of sanctions on Russia’s economy. First, Russia faces the obstacle to trade and obtain resources. Leading to the nation initiating alliances with other nations non-alli...